1980 (1) TMI 56

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....s a deduction under section 37 of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, there was any evidence before the Tribunal to come to the conclusion that the payments of mamool were made by the assessee ? (3) Whether the Appellate Tribunal's allowance of deduction without verifying the genuineness of the payment is sustainable in law ? " The assessee is a registered firm carrying on business as stevedoring contractors to M/s. Scindia Steam Navigation Company Ltd. and Food Corporation of India at the Madras port. It claimed deduction of payments of commission said to have been made to the crew of various ships calling at the port. The ITO took the expenditure to be in the nature of entert....

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....and it has not been disputed by the I.T. authorities, that the assessee had to obtain a " no damage " certificate from the captain of the ship before it could claim the bills from its constituents. In order to preserve proper relationship with the staff in the ship so as to enable such certificates being obtained, the assessee, it was claimed, made these payments for the several years. The ITO himself has, in the course of the assessment order, observed about the inevitable nature of this expenditure in this trade. The Tribunal also has apparently drawn on the treatment of the claim made in similar cases. It was in that context that the Tribunal estimated 15% of the commission: payments as claimed by the assessee as inadmissible. The balanc....

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....ayment is about 25 paise for every tonnage cleared. The assessee did not have any proper account regarding the total tonnage cleared. It is only in the absence of such records that the Tribunal had to estimate the disallowable portion of the payment and restricted the disallowance to 15%. We consider that in coming to this conclusion the Tribunal cannot be said to have committed any error of law. The third question proceeds as if the evidence of the payment is disputed. Even the ITO had not questioned the genuineness of the payment. He allowed a part of it with reference to the first three years on the basis that it was entertainment expenditure and disallowed the rest in accordance with the law then in force. He did not allow any part o....